Transfer Pricing Associates

Corporate Licensing Practices that Evolve with Time

post Wednesday September 26, 2012


With the ever-evolving corporate culture, strategies and ways of doing business, companies must also update their intellectual property and its licensing practices in order to remain successful.

One example of a company that has constantly been updating their IP licensing practices is Hewlett Packard.  After acquiring Compaq in 2002, it successfully brought 4 large companies together: HP, Compaq, Digital and Tandem.  All four companies were active in the technology and innovation sectors, which meant that it was vital for their IP practices be harmonized as well as provisions established that attributed unfavorable value to assets or lack of risk association with some deals.

In an effort to efficiently and effectively manage their IP licensing practices, the Board of Directors of HP decided to take a centralized approach to managing the IP. The centralized management would account for:

·       The assignment of HP’s assets to HP development company (a separate entity created solely for that purpose)

·       Create a global function for IP monetization

·       Reviewing all transactions occurring within the company relating to IP rights and obligations.

The CEO of HP met up with the VP of IPL on a weekly basis in order to discuss and implement consistent and best in class IP practices that were also aligned with corporate strategies and board involvement.  IPL goals include among others to use IP to gain strategic value for HP through product differentiations and freedom of operation.

Furthermore, the IP transaction attorneys have created deal templates and clause libraries such to streamline review cycles and more consistent practices  across the company. They also communicate on a regular basis to discuss contracts and IP rights. Patent portfolios are revised and those that are no longer applicable are sold. Each patent is reviewed and classified and their legal and technical strength is assessed.  Currently, their portfolio consists of about 34,000 patents.  Categorizing each patent allows for the assessment of its strategic and monetization opportunities and thus for the simple identification of the patents when called upon by third party companies.

The IPL team requires the global business units to identify technologies that are suitable for licensing.  Also, patents designed for specific purposes have been licensed out for completely different purposes.
HP’s practice of licensing out their IP has become a key monetization tool in their global business units.
HP is currently ranked tenth in the world in terms of their brand and continues to increase in value.

Source: IAM-magazine

Image Source: Free Digital Photos

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